Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Google Inc (GOOG): Something Worth Waving The Flag Over

Page 1 of 2

With the launch of Motorola Mobility’s new Moto X, Google Inc (NASDAQ:GOOG) becomes the first tech company to be able to stamp “Made in the U.S.A.” on a smartphone. While it’s not the first tech product to have its manufacturing “onshored,” it is the first smartphone and with that comes some benefits for consumers, such as being able to order and receive custom designs within days.

Google Inc (NASDAQ:GOOG)There was a lot of concern whether Google Inc (NASDAQ:GOOG) would be able to keep its manufacturing costs under control, since that was one of the reasons behind Apple Inc. (NASDAQ:AAPL), Dell Inc. (NASDAQ:DELL), and Hewlett-Packard Company (NYSE:HPQsending responsibility for assembling their products overseas. While it also made sense because of the network of components suppliers that were domiciled in Asia, it can’t be denied that labor costs were a big factor, and China in particular had a large and willing workforce for the task.

Yet a new review by the market researchers at IHS Inc. (NYSE:IHSfound that the Moto X has a bill of materials that are comparably priced with foreign-sourced smartphones that could herald a return of tech manufacturing jobs to American shores.

In its report, IHS says that after tearing down the Moto X, the preliminary total BOM is just $214, which combined with $12 in manufacturing costs, gives the smartphone a total cost to produce of $226, smack in the middle between Apple Inc. (NASDAQ:AAPL)’s iPhone 5 at $207 and Samsung’s Galaxy S4 at $237.

To keep its price low, Google Inc (NASDAQ:GOOG) apparently hasn’t blazed many trails in design or hardware, but functionality remains comparable with foreign-sourced rivals and use of popular, readily available components like chipsets from QUALCOMM, Inc. (NASDAQ:QCOM), which are currently in high production, means costs are kept to a minimum.

IHS goes on to say that with a retail price between $540 and $580 and carrier subsidies around $300, the Moto X is on the prowl for grabbing attention with wireless carriers who typically subsidize Apple Inc. (NASDAQ:AAPL) and Samsung to the tune of $400 per smartphone.

The news reflects something of a trend among tech companies to repatriate jobs to America. Apple Inc. (NASDAQ:AAPL) announced last year that it would be producing some Macs in the U.S. and Google Inc (NASDAQ:GOOG)’s own failed Nexus Q was made here. Even Chinese computer maker Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) has said it will begin producing ThinkPads in the Land of the Free.

While the “Made in the U.S.A.” label gives manufacturers some marketing heft to their products, the real reason for this sudden shift in focus could be that China is no longer the attractive economy it once was. Based on its success in recent years — it surpassed the U.S. in 2010 as the world’s largest manufacturing muscleman — wages are rapidly rising, up 14% in 2012 and another 10% so far this year. Apple Inc. (NASDAQ:AAPL)’s assembler in China, Foxconn, hiked wages anywhere from 16% to 25% in April.

Page 1 of 2
Loading Comments...